How Megaships and Fuel Costs are Changing Ocean Cargo

Posted on March 3, 2016

On January 1st the Wall Street Journal posted an article detailing the importance of the expansion of the Panama Canal. This spring, once the canal is open and new megaships are traveling through, east coast ports are banking on the cargo they’re bringing through to help further increase their current growth projections. However, we’re discovering that with the low cost of fuel, some shipping lines are moving all the way around the Cape of Good Hope to reach the east coast from Asia.

In many cases, it’s cheaper for ships to sail around the Horn of Africa than to move through the canals and pay the surcharges. Should the timing delays prove inconsequential, a good possibility as the delay will ease some east coast port congestion; we may see an entirely new maritime traffic pattern open up.

Sailing around the Cape of Good Hope to Asia from the U.S. East Coast adds an average distance of 4,400 nautical miles if ships avoid the Panama Canal and 1,500 nautical miles for those avoiding the Suez Canal. Typical speeds on a return trip via Panama average 12.9 knots (13.7 knots via Suez) and those speeds would increase to 18.6 avoiding Panama and 15.7 avoiding Suez to maintain the schedule. The savings, according to the February 14th issue of SeaIntel Sunday Spotlight, could range from $2,541 to $421,217 depending on the shipping line, ports of call, and capacity. Another bonus comes if services slow to accommodate the distance and lower speeds; the current over-capacity and port delays can be

significantly eased as the flow would lose approximately 60-80 vessels.

For our ocean shipping customers, this means you’ll have even more options and hopefully fewer delays. B.I.G. Logistics can assist you with choosing the best routing for your cargo and your timing needs. Let us know how we can help and guide your cargo.